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CBA, Icon Market Analysis Finds Growing Consumer Demand for Home Equity Lines of Credit
Today at CBA LIVE 2015, the Consumer Bankers Association’s (CBA) Home Equity Lending Committee in collaboration with Icon Advisory Group, Ltd. revealed the most recent results of ongoing market analysis conducted with CBA member banks on consumer demand for home equity lines of credit (HELOC).
“With recovering home values and improving consumer confidence, we are seeing an increase in demand for HELOCs from qualified borrowers. Recent performance characteristics show lenders are meeting borrowers’ needs in a prudent and responsible manner,” said Nancy Elkus, Vice President, Sr. Consumer Lending Product Manager at Fifth Third Bank and the Chair of CBA’s Home Equity Lending Committee.
“We now have seen HELOC origination growth in each of the past 13 quarters with annual growth of nearly 22% in both 2013 and 2014. As of March 15, 2015, HELOC originations are up 36% versus the same period last year,” said Shaun Richardson, Vice President of Business Intelligence/Technology, Icon Advisory Group, Ltd.
- The continued recovery of the housing market, an improvement in consumer confidence, and attractive interest rates have contributed to an increase in consumer demand for Home Equity lending products. As a result, HELOC applications increased 25% in 2014.
- Overall, HELOC originations grew 22% in 2014, on the back of 21% growth in 2013.
- While consumer demand for HELOC’s is accelerating across the country, the strongest growth rates have been in the West (28%), Midwest (26%), and South (24%).
- This growth was driven almost exclusively by borrowers with very low risk credit profiles and strong equity positions in their homes.
- Over 85% of all HELOC originations were less than or equal to 80% CLTV.
- The weighted average credit score of HELOC borrowers during 2014 was a solid 777.
- Recovering home values have helped grow average line sizes by 7%, while increasing consumer confidence has helped increase balances by nearly 10%.
- Traditionally, the majority of home equity originations have been in 2nd lien position. During 2014, 1st lien volume accounted for more than 45% of HELOC total origination dollars and outpaced 2nd lien volume growth.
- Home Equity originations since 2010 have demonstrated stellar performance with monthly delinquency rates around .4% while overall industry delinquency rates have decreased more than 25 bps since January 2013.
The Consumer Bankers Association (CBA) is the trade association for today's leaders in retail banking - banking services geared toward consumers and small businesses. The nation's largest financial institutions, as well as many regional banks, are CBA corporate members, collectively holding two-thirds of the industry's total assets. CBA’s mission is to preserve and promote the retail banking industry as it strives to fulfill the financial needs of the American consumer and small business.
About CBA’s Home Equity Lending Committee
CBA's Home Equity Lending Committee is the industry's only forum focused on the business aspects and compliance issues of mortgage secured loans and lines of credit. In addition to educating regulators and lawmakers on the many facets of home equity lending, the committee monitors regulatory and legislative action and keeps members informed with regular updates.
Icon Advisory Group, Ltd. is the consumer lending and mortgage industry’s innovator for competitive lending analytics providing near-real time pricing and volume analytics. Timely, reliable and specific information delivered to lenders supports their ability to manage margin, assess risk, benchmark operations and strategically grow share. The company strictly adheres to the principles of independence to ensure its role of an unbiased infomediary for the consumer lending and mortgage industry. For more information, visit www.iconadvisory.com.